New reports by Zero Waste Europe and Planet Tracker slam the industry for piecemeal attempts at sustainability and circularity; where it fails to adopt more holistic approaches and take greater responsibility for environmental and social issues, investors must help move the needle.
Zero Waste Europe sets essential criteria for zero-waste fashion business models in context of EU Textiles Strategy
Image credit: Zero Waste Daniel
This week, Zero Waste Europe (ZWE) set out four essential criteria for mapping zero-waste fashion business models — urging industry decision-makers to look beyond product circularity and “eco-design.”
Beyond Circular Fashion – a new business model for the fashion industry maps the state-of-play of today’s fast-fashion business model — which is characterized by overconsumption, resource depletion, social exploitation, fossil-based fibers and greenwashing.
Published in the context of the new EU Textiles Strategy — which aims to help the EU shift to a climate-neutral, circular economy in which textiles are more durable, reusable, repairable, recyclable and energy-efficient — the report states that existing approaches and initiatives to making fashion fair and sustainable, while an important step forward, are insufficient in addressing harmful business models.
As detailed in the report, in recent decades the proliferation of cheap, synthetic fibers such as polyester has fueled the conventional, linear business models based on overproduction — the detrimental effects of which have been compounded by limited accountability for brands and manufacturers for the negative environmental and social impacts. This overproduction represents the biggest environmental impact of the fashion sector, way ahead of the impact of end-of-life management.
Yet, legislative tools considered to date focus on products and waste — rather than on systemic factors or business models. Since overproduction is a systemic feature of a growth-dependent business model, current legislative measures and the latest EU textiles strategy leave the most significant point unaddressed. Voluntary measures such as labels — which should help consumers to make sustainable choices — are currently limited to toxicity, circularity and transparency but lack a systemic approach that could lead to fostering a truly sustainable business model.
ZWE asserts that the current push to increase the circularity of fashion products is a step in the right direction but insufficient to change current business models. As a result, given the additional resources that are often required to produce quality and lasting products, the efforts of the sector to move towards sustainable production could paradoxically lead to a higher environmental impact, if the model continues to be based on overproduction vs a demand-based approach.
To reverse the current trend and pave the way for business models that fully comply with a circular economy and planetary boundaries, ZWE’s report identifies four essential criteria that must be simultaneously met:
Design for physical and emotional (as in, staying in fashion longer) durability;
A shift toward demand-driven production, to phase out unsold and discounted merchandise — which often ends up being incinerated or landfilled;
Full supply chain transparency and traceability post-sale;
Theresa Mörsen, Waste Policy Officer at ZWE, stated: “With this report, we are establishing guidance for businesses to become truly sustainable — ending overproduction and consumption to respect planetary boundaries. This will help scaling up sustainable business models; and ZWE intends to empower pioneers in this field.”
Report: Investors must hold apparel companies accountable for lack of ESG progress
Image credit: Godisable Jacob
Meanwhile, new research by financial think tank Planet Tracker asserts that textile industry shareholder meetings are too focused on governance, to the exclusion of environmental and social proposals.
Under-dressed: Investors need to up their engagement on textiles reveals that of the 1,198 ESG proposals submitted to the annual shareholder meetings of retailers in the Planet Tracker universe since 2015, 87 percent were on governance issues — social and environmental proposals accounted for just 11 percent and 2 percent, respectively.
The research found that key environmental issues (the report focused on the ‘E’ in ESG since, while still concerningly low, the 26 social proposals in 2022 were the highest number since 2015) pertinent to the industry — such as fiber mix and unsustainable manufacturing processes — do not appear to be widely raised in stakeholder meetings. Investigations into the data found no proposals that included key terms such as fiber, biodiversity, deforestation and synthetic, to name a few — suggesting that this crucial category is being neglected.
Furthermore, the report found that only a small number of shareholder proposals on textile sustainability issues have been advanced over the past few years — and all have been voted down.
Echoing key points in the ZWE report, Under-dressed concludes that the textile industry must make significant changes to move to a sustainable model and calls on investors to promote corporate focus on two priority areas:
Supply chain investment: Much of the environmental damage associated with textiles occurs in the supply chain through chemical pollution and overuse of resources. Fashion brands must actively work with suppliers to lessen environmental impact.
“It’s clear that the textiles industry needs significant operational changes and investment to move it towards a sustainable environmental footprint,” says Richard Wielechowski, Senior Investment Analyst and Head of the Textiles Tracker at Planet Tracker. “Investors can play a crucial role by pressuring corporates to provide specific details about how they are dealing with key issues, and by bringing proposals to vote that set out targets for change and hold management accountable for the results. Bringing votes to shareholder meetings is an important way for investors, and the rest of society, to help shape the way that the industry approaches key environmental and social proposals and hold them to account on results.”